According to Business Insider, Sonder Holdings is filing for Chapter 7 bankruptcy and liquidating its entire US business after Marriott International abruptly ended their partnership on Sunday. Interim CEO Janice Sears said the failed Marriott collaboration caused “substantial and material loss in working capital” and left the company with no alternatives. The news came just one day after Marriott terminated the deal, which was supposed to let Marriott Bonvoy members book Sonder rentals directly through Marriott’s platforms. Shares plummeted 60% to just $0.20 per share, a devastating fall for a company that went public in 2022 with a $1.925 billion valuation. Travelers like NYU professor David Klingbeil were suddenly evicted mid-stay, receiving emails telling them to vacate properties by 8 a.m. Monday morning.
The Marriott partnership that wasn’t
Here’s the thing about these big corporate partnerships – they look amazing on paper but execution is everything. Sonder basically bet the farm on the Marriott deal, which was supposed to give them access to millions of loyal Bonvoy members. But when Marriott pulled the plug with zero warning, it exposed how fragile Sonder’s entire business model had become. They were counting on that steady stream of hotel-branded customers to stabilize their operations, and when it vanished overnight, so did their working capital. It’s a brutal reminder that in the hospitality world, even the most promising alliances can turn toxic fast.
The bigger short-term rental shakeout
This isn’t just about one company failing. We’re seeing the entire alternative accommodation sector hit a major correction. Sonder tried to be the “professionalized” Airbnb – fully managed properties with hotel-like consistency. But that model comes with massive overhead, and when travel patterns shifted post-pandemic, the economics stopped working. Now they’re joining a growing list of proptech and rental startups that scaled too fast without sustainable unit economics. The question is, who’s next? Companies that built their businesses on cheap capital and aggressive expansion are finding the current environment absolutely unforgiving.
What happens to the short-term rental market now?
So where does this leave the industry? Well, for property owners and managers relying on platforms like Sonder, it’s back to square one. Many will likely shift their inventory back to Airbnb or VRBO, which could temporarily flood those markets with supply. For business travelers who valued Sonder’s consistency, it’s a real loss. And for the hospitality sector overall, it shows that hybrid models combining hotel reliability with rental flexibility are much harder to execute than they appear. The companies that survive will be those with stronger fundamentals and less dependency on any single partnership. Basically, don’t put all your eggs in one Bonvoy basket.
